Gold prices in Pakistan fell on Thursday. The price for a gram dropped to PKR 37,177.11 from PKR 37,270 the previous day. The price for a tola also decreased, going down to PKR 433,629.20 from PKR 434,709.90. Globally, the gold market is down as traders take profits. Even with this drop, gold prices are still up about 55% this year. The U.S. is dealing with economic issues due to a government shutdown and trade tensions with China.

Central Banks Increasing Gold Reserves

Worldwide, central banks, especially in emerging economies, are boosting their gold reserves. In 2022, they added 1,136 tonnes. Gold serves as a protection against inflation and currency decline, often moving in the opposite direction of the U.S. Dollar and U.S. Treasuries. Gold prices usually rise during geopolitical tensions or when interest rates drop. The price of gold mostly depends on the strength of the U.S. Dollar since it is priced in dollars. A weaker dollar typically leads to higher gold prices. After a historic 55% increase this year, some traders are taking profits. This recent dip seems to be a technical correction, and the long-term trend for gold remains positive. Traders should see this as a time of consolidation, not a significant drop.

Market Reactions to Economic Indicators

The market is currently anticipating a 97% chance of a 25-basis-point rate cut from the Federal Reserve, which supports gold prices. We’ve seen similar trends before, such as during the rate cuts in 2019, which led to a big increase in gold prices. A weaker dollar after the Fed’s decision may provide further support. The ongoing U.S. government shutdown, now in its fourth week, is increasing safe-haven demand. During the long shutdown in late 2018 and early 2019, gold prices rose steadily by over 4% due to political uncertainty. Until a funding solution is found, this instability helps maintain gold prices. U.S.-China trade tensions are also making markets nervous, with new export threats keeping investors anxious. The CBOE Volatility Index (VIX) is above 20, showing high investor concern. The upcoming meeting between the U.S. and Chinese presidents could lead to unexpected market movements. We should also note the ongoing demand from central banks, which supports gold prices in the long run. Recent data from the World Gold Council for Q3 2025 indicates that central banks added another 250 tonnes to their reserves, continuing the buying trend seen since 2022. This steady demand helps offset speculative selling. With these mixed signals, there are opportunities in the options market to manage risk and prepare for future moves. Buying long-term call options allows investors to benefit from the strong upward trend while limiting risk. On the other hand, short-term put options could effectively protect against further profit-taking or a decline in U.S.-China negotiations. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now